Legislature(1997 - 1998)
01/16/1998 09:00 AM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE January 16, 1998 9:00 a.m. MEMBERS PRESENT Senator Gary Wilken, Chairman Senator Loren Leman, Vice-Chairman Senator Jerry Ward Senator Johnny Ellis MEMBERS ABSENT Senator Lyda Green COMMITTEE CALENDAR CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 189(JUD) am "An Act relating to sale, gift, exchange, or distribution of tobacco and tobacco products." HEARD AND HELD SENATE BILL NO. 197 "An Act relating to health care services provided by, and practices of, a health maintenance organization; and prohibiting health maintenance organizations from limiting free speech of health care providers." HEARD AND HELD PREVIOUS SENATE COMMITTEE ACTION HB 189 - See Rules minutes dated 5/10/97. SB 197 - See HESS minutes dated 1/14/98. WITNESS REGISTER Gordon Evans Health Insurance Assn. of America 318 4th Street Juneau, Alaska POSITION STATEMENT: Commented on SB 197. Representative John Cowdery Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Sponsor of HB 189. Anne Marie Holen Alaska Native Health Board Anchorage, Alaska POSITION STATEMENT: Supports some provisions of HB 189. Michael Livingston P.O. Box 112612 Anchorage, Alaska 99511 POSITION STATEMENT: Commented on HB 189. Joyanne Bloom Juneau Tobacco Prevention Network 883 Basin Road Juneau, Alaska POSITION STATEMENT: Commented on HB 189. Dean Guaneli Assistant Attorney General Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 POSITION STATEMENT: Commented on HB 189. Jennifer Strickler Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811-0806 POSITION STATEMENT: Answered questions about license suspension. Marco Pignalberi Staff to Representative Cowdery Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Commented on HB 189. Bob Bartholomew Income & Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 POSITION STATEMENT: Commented on HB 189. ACTION NARRATIVE TAPE 98-2, SIDE A Number 001 SB 197 - REGULATING HEALTH MAINTENANCE ORGS. CHAIRMAN WILKEN called the Senate Health, Education and Social Services (HESS) Committee to order at 9:06 a.m. Present were Senators Wilken, Ward and Leman. Chairman Wilken announced the first order of business was to continue taking public testimony on SB 197, which would also be heard in committee on Wednesday, January 21, at the sponsor's request. GORDON EVANS, representing the Health Insurance Association of America (HIAA), clarified HIAA's position on SB 197. In previous testimony, Mr. Evans stated that HIAA believed SB 197 is unnecessary; opposed Section 2 which mandates certain benefits for chiropractors; and did not oppose the provisions in Sections 1 and 3. HIAA believes Section 1, which proposes to amend current law to require a carrier to include, in its evidence of coverage, guidelines explaining when treatment may be denied, is unnecessary because managed care plans are currently required to file a Schedule of Benefits with the Division of Insurance when establishing plans in Alaska. The Schedule of Benefits, which is provided to encourage active enrollment, is a legal document that describes in detail what the plan does and does not cover, and rules and procedures governing eligibility. Instead, HIAA would be willing to provide to the patient or health care provider, upon request, a written explanation of an adverse determination. Regarding Section 3, MR. EVANS said three of the five parts impose limits on communication between a health care provider and the enrollee, and require written notification of cause for termination of a health care provider. HIAA believes those provisions are contractual matters. Most managed care firms guard their current customers and information about their plan for purposes of confidentiality. Consequently, plans will include contractual provisions asking the health care provider to agree to not disparage the health plan to enrollees or attempt to induce the enrollees to leave a plan or join another. These types of contractual provisions are not unique to HMOs; they are imposed by other employers through contracts or employment manuals: no business can tolerate its employees driving customers away. As the general contractor employing the provider, health plans could be held jointly liable for libelous statements by a provider or spurious claims which may impact another provider's business. Also provider's who might have multiple contractual arrangements with health facilities and plans could attempt to steer patients to facilities in which they have a personal financial interest. Finally, the medical community has protected itself against disclosure of data which compares physicians and facilities based upon clinical outcomes. The same level of analytical objectivity should be required in any qualitative statements made by physicians who are in a contractual relationship with an HMO. MR. EVANS read part of the written testimony he submitted for the committee file and concluded his remarks by saying insurers should not be required to subject every denial of health care coverage to a second provider's opinion. HIAA always opposes mandating benefits because that practice will drive up costs and ultimately limit the affordability of quality care for consumers. Mr. Evans stated he would be willing to work with the sponsor on changes to SB 197 that HIAA could support. Number 140 SENATOR WARD asked if the sponsor requested that SB 197 be held in committee. CHAIRMAN WILKEN repeated the bill would be held until Wednesday at the sponsor's request. HB 189 - RESTRICT TOBACCO SALES REPRESENTATIVE JOHN COWDERY, sponsor of HB 189, announced that he would first discuss the original version of HB 189 and then the proposed committee substitute. HB 189 prohibits self-service displays of tobacco products in retail stores. Self-service displays are notoriously susceptible to shoplifting and impulse buying by minors. Their elimination has proven to be a popular means of removing access by minors to cigarettes. More than 180 cities throughout the U.S. have already implemented prohibitions on self service tobacco displays. Sixty days ago the Municipality of Anchorage (MOA) unanimously passed an ordinance modeled after HB 189 and last year the House unanimously passed HB 189. The operative statement of the bill is found is Section 3 and requires sales to occur in a manner that allows only sales clerks to control access to tobacco products. REPRESENTATIVE COWDERY discussed the remaining sections of the bill. Section 2 changes the penalty provision from a violation punishable by $300 to a class B misdemeanor punishable by a fine of not more than $1000. Section 1 of the bill establishes the offense of selling or giving tobacco to a minor and contains the culpability standard necessary to prosecute an offense under this act. By changing the penalty level of the offense from a violation to a class B misdemeanor, the culpability standard must be increased from negligent conduct to knowing conduct. The Attorney General's Office prefers to keep negligent behavior as the standard of culpability which is possible because of a court ruling in October of 1997 in the Exxon-Valdez case. Representative Cowdery said he favors maintaining the negligent standard if the stiffer penalty can be imposed. REPRESENTATIVE COWDERY continued. Section 4 of HB 189 applies to businesses licensed as cigarette manufacturers, distributors, direct-buying retailers, or vending machine operators, and allows for the suspension or revocation of the license for authorizing the sale of tobacco products to minors. Section 5 repeals two subsections of the statute relating to the regulation of cigarette vending machines because those subsections were included in HB 159. REPRESENTATIVE COWDERY suggested restoring those subsections in the proposed committee substitute. This action would incorporate existing law related to vending machines. Section 6 notes the Legislature's intent that HB 159 and HB 189 both be given maximum effect. This section will become unnecessary in the proposed committee substitute. Number 226 SENATOR ELLIS asked if Representative Cowdery was referring to the proposed committee substitute before the committee. CHAIRMAN WILKEN noted he would entertain a motion to accept SCS CSSSHB 189(HESS) (Ford 0-LS0711\K) as the working version before the committee. SENATOR LEMAN so moved. There being no objection, CHAIRMAN WILKEN announced SCS CSSSHB 189(HESS) was adopted as the working document of the committee and explained that is the committee substitute Representative Cowdery was referring to. Number 237 SENATOR LEMAN said that while recently shopping at a "warehouse buying club" he noticed a large section of tobacco products displayed in a manner accessible to anyone. He asked if this bill will preclude carton sales in those stores. REPRESENTATIVE COWDERY answered that type of situation gets into the question of wholesale and retail sales; it is his intent to require that only clerks can access the product for the customer. SENATOR LEMAN asked if the products would be caged. REPRESENTATIVE COWDERY said that could be one way to isolate them. SENATOR WARD said he introduced a similar piece of legislation to raise the penalties for selling tobacco products to minors to that for selling alcohol to minors. He noted the increase in tobacco taxes was supposed to stop minors from smoking, and asked why this legislation was necessary. REPRESENTATIVE COWDERY answered he did not vote for the tax bill. Regardless of the tax on cigarettes, HB 189 will restrict access to tobacco by minors. Number 285 SENATOR WILKEN noted two people were waiting to testify via teleconference from Anchorage. ANN MARIE HOLEN, representing the Tobacco Control Program with the Alaska Native Health Board, and Citizens to Protect Kids from Tobacco, gave the following testimony. Her groups are very pleased to see continued interest among policy makers in reducing the burden of tobacco-caused deaths in the State. Almost all nicotine addicts get hooked in their teens, so it is extremely important to make it harder to get tobacco during those vulnerable years. She strongly supports the provision in HB 189 that would remove self-service tobacc assisted. This is a simple measure that would eliminate shoplifting of tobacco products if properly enforced. Right now shoplifting is a major source of tobacco for young smokers as other states' surveys have shown. Also, by removing self-service displays, advertising methods that accompany those displays will be eliminated. MS. HOLEN expressed concern about raising the culpability standard to "knowingly" because enforcement officials will have to prove that a clerk knew he or she was selling to an underaged buyer. This standard would erect such an obstacle to meaningful enforcement as to essentially eliminate it. The standard was changed in 1992 from "knowingly" to "negligently" because the law was unenforceable. Losing one's business license for tobacco sales to minors is a severe consequence; current law already provides for that. The most important thing is to actively enforce the laws already on the books. She urged committee members to support banning self-service displays, tightening vending machine restrictions, and closing the loophole that allows minors to sell to minors. Number 337 SENATOR WARD asked Ms. Holen to submit documentation to substantiate her comment that the tobacco tax has reduced teenage smoking. MS. HOLDEN clarified that she did not refer to the tobacco tax in her testimony but added she does expect the increased tobacco tax to reduce youth smoking by about 20 percent. She noted all tobacco control experts agree this problem needs a comprehensive approach and the tobacco tax increase is one part of a comprehensive strategy. SENATOR WARD asked Ms. Holen to provide the committee with information about the 20 percent reduction. She agreed. Number 361 MICHAEL LIVINGSTON, a police officer, made the following comments on his own behalf. The Alaska Police Standards Council says that one of the fundamental duties of Alaska law enforcement officers is to safeguard human lives and to protect the innocent against deception. Most Alaskans become addicted to tobacco when they are in their early teens when it is not even legal for them to possess it. He has issued around 150 tickets to minors during the past five years for possession of tobacco. In 1997 he issued 32 citations to store clerks for selling tobacco to minors. AS 11.76.100, written in 1992, does not need modification. If HB 189 is adopted, it will be unenforceable because police will have to prove that clerks knowingly sold to minors. Of the 32 citations, only one clerk admitted she knew the buyer was a minor. Mr. Livingston believed the $300 fine is an adequate penalty and that there is no reason to change the offense from a violation to a misdemeanor. He agrees that the restriction on access is a good idea, but HB 189 will be unenforceable if the "knowingly" standard is required. He believes sales of tobacco to minors has already been dramatically reduced in Anchorage as a result of enforcement. He urged the committee not to adopt the "knowingly" standard proposed under HB 189. CHAIRMAN WILKEN asked Mr. Livingston if he is an Anchorage policeman. MR. LIVINGSTON said he does work for the Anchorage Police Department but he is not representing them today. Number 401 SENATOR WARD applauded Mr. Livingston for his enforcement efforts and asked if Mr. Livingston considers tobacco addiction to be on the same level as alcohol addiction. MR. LIVINGSTON thought both alcohol and tobacco are very serious concerns, and added that if the State does not continue to reduce the sale of tobacco to minors, hundreds of thousands of dollars under the SINAR amendment for alcohol and drug counseling will be jeopardized. JOYANNE BLOOM, representing the Juneau Tobacco Prevention Network, thanked Chairman Wilken for hearing this measure which will help to keep tobacco out of the hands of youth. The Network has been offering smoking cessation classes in the high school and has been educating vendors. She noted last Spring nine citations were issued after a sting operation occurred in Juneau. Two of those citations were thrown away because the clerks were under the age of 19. That loophole will be fixed by HB 189. She noted youth are selling stolen cigarettes in the high school for $1 each. Regarding the negligent versus knowingly standard, a clerk would have to check a minor's ID and sell that person cigarettes anyway to be charged with a misdemeanor under the knowingly standard. SENATOR LEMAN said a person would be breaking current law if he/she sold to a minor without checking an ID because of the negligent standard. MS. BLOOM agreed and said during the arraignments at the court, she learned that some asked for the ID and did not look at it carefully enough, but more often the ID was not checked and the minor lied about his/her age. SENATOR WARD stated he believes tobacco kills more people than alcohol, and that stiffening laws regarding alcohol has had a favorable effect. He asked Ms. Bloom if she thought that if all tobacco retailers were educated on its effects and also subject to severe penalties, it would have a reducing effect. MS. BLOOM agreed that tobacco kills far more people, but said the $300 fine imposed during the arraignments really hurt the vendors. After that occurred, the Network sent out forms to all vendors for their employees' signatures, explaining the consequences of tobacco sales by employees. SENATOR WARD asked Ms. Bloom if she thought vendors would be more careful about who they hire if they knew they might lose their license to sell tobacco. MS. BLOOM thought they would. Number 500 DEAN GUANELI, Assistant Attorney General, Department of Law, addressed his comments to the committee substitute, which might have the effect of limiting enforceability of the current statute. The Alaska Supreme Court made a definitive ruling in October of 1997 regarding the minimum level of culpability necessary under the Alaska Constitution to establish a criminal law violation: that level is simple negligence. If one applies a knowingly standard of mental culpability, it would be nearly impossible to enforce this law because that would require a situation in which a clerk looked at an ID, determined the buyer was under 19, and sold tobacco products anyway. He recommended retaining the negligence standard by amending the committee substitute on page 1, lines 7, 9, 12, and page 2, line 24, by replacing the word "knowingly" with the word "negligently," and on page 3, lines 2-3 by replacing the word "knowing" with "simple negligence." MR. GUANELI explained the second aspect of HB 189 that affects enforceability goes to the penalty section. He agreed with Officer Livingston that it is not necessary to make these offenses criminal because a violation punishable by a fine is enough. Most violators will be store clerks, who will risk losing their jobs for selling to minors. In addition, when conduct is criminalized, the offender has the right to a court-appointed attorney and jury trial, which will delay the process. Most offenders to date were caught red-handed, pled gu enforcement mechanisms, the business license endorsement of the store owner can be suspended or revoked. Mr. Guaneli felt that is the stronger deterrent and that employers will need to train employees to ensure they are carefully checking IDs. Mr. Guaneli stated the current statute, AS 43.70.075, provides that a business license holder have a separate endorsement to sell tobacco products. If a violation occurs, the Department of Commerce can revoke the endorsement. For a first offense, the maximum suspension is 45 days; for a second offense within two years, the maximum is 90 days. Rather than reclassify the offense, Mr. Guaneli said the amount of suspension time could be increased. Number 564 SENATOR LEMAN agreed with Mr. Guaneli regarding reclassifying the offense because he believes swift and predictable penalties are more effective if enforced consistently than those that are drawn out, even though they are more severe. He asked if the department is enforcing the current law, and if not, why. MR. GUANELI agreed with Senator Leman's point and noted a representative from the Department of Commerce and Economic Development was available to answer that question. CHAIRMAN WILKEN asked if Representative Cowdery agreed to the four proposed changes to the committee substitute. REPRESENTATIVE COWDERY said he did. CHAIRMAN WILKEN commented that being involved in the wholesale food business, he is aware of the efforts stores are trying to make to restrict tobacco sales. He noted one of the cardinal rules of the business is to never be out of anything, especially tobacco, and believed a 45 day suspension would be a serious deterrent. SENATOR LEMAN stated under current law the minimum fine is $300. He asked what the maximum amount of that fine could be. MR. GUANELI answered there are certain violations under Alaska law that carry up to a $1,000 fine and do not trigger the right to a jury trial and counsel. That right is triggered by offenses that denote criminality. He thought the maximum fine imposed for this offense could be as high as $1,000. SENATOR LEMAN noted his interest in working with the sponsor to retain the offense as a violation, and possibly increase the fine. JENNIFER STRICKLER, Administrative Manager of the Division of Occupational Licensing and Business License Administrator, Department of Commerce and Economic Development, gave the following testimony. Suspension of endorsements to sell tobacco was enforced for the first time in 1997. In order for the department to take action in these cases, the statute requires a conviction. The department gets those records from the court system. To date, five businesses have had their endorsements suspended for 45 days. Those businesses were hurt by the suspension. Currently, one business has a license suspended, and 20 cases are under review by the Attorney General's Office. Number 549 SENATOR LEMAN thought that publicity about the suspensions can be an effective tool to change behavior. He asked if any of these cases were publicized. MS. STRICKLER said several newspaper articles have been published and some businesses are watching each other for compliance. CHAIRMAN WILKEN asked if license revocation is limited to the particular site where the violation occurred, even though the licensee might own ten stores. MS. STRICKLER said that was correct. SENATOR ELLIS asked if Chairman Wilken's intention was to work with the sponsor on the negligence standard and the penalty section. He commented he is undecided on the proposal to raise the penalty amount. He asked if the vending machine provisions were put back into the committee substitute, and noted his concern that that language may not be expansive enough. He explained that vending machines can be located in employee break rooms, which is reasonable when the employees are all adults. A problem does arise, however, if the employer also employs minors. MARCO PIGNALBERI, staff to Representative Cowdery, stated the same vending machine issue has been raised with the Municipality of Anchorage, in regard to its ordinance. He noted his intent to discuss the problem with the MOA to determine a solution, as the concern is a legitimate one. SENATOR ELLIS asked if a business is both a retailer and a wholesaler, such as COSTCO, whether it would be exempt from the restriction on self-serve tobacco displays. BOB BARTHOLOMEW, Assistant Director of the Income and Excise Tax Division of the Department of Revenue, said that Section 4, line 28, of the proposed committee substitute, provides for an exemption if the sale is a wholesale transaction and the person is licensed as a distributor. He interpreted that to mean if a business conducts retail transactions, and is licensed as a distributor, the exemption would not apply, requiring that business to keep tobacco products segregated. SENATOR ELLIS asked if the Department of Law agrees with that interpretation. CHAIRMAN WILKEN noted he would ask a representative of the Department of Law to discuss that issue at the next meeting. He announced the committee would reschedule HB 189 at the sponsor's request. SENATOR LEMAN clarified he was not necessarily supporting an increased fine for the violation; he was suggesting it as an alternative to the creation of a misdemeanor. He suspected a $300 fine would be a deterrent. CHAIRMAN WILKEN added one could also lose his/her opportunity to remain employed. He announced Barbara Brink, of the Alaska Public Defender's Office was available to answer questions via teleconference. There being no questions, and no further testimony on HB 189, CHAIRMAN WILKEN made the following announcements. Both the House and Senate HESS committees have been invited to a presentation on March 27 on child development during ages zero to five. He introduced staff, and noted the next meeting would be held on Wednesday, January 21. (PLEASE NOTE: THE CORRECT DATE FOR THE PRESENTATION ON CHILD DEVELOPMENT IS MARCH 26.) There being no further business to come before the committee, CHAIRMAN WILKEN adjourned the meeting at 10:20 a.m.